Price Dispersion and Accessibility: A Case study of Fast Food

This study examines spatial variation in the price and accessibility of fast food across a major urban area. We use novel data on the price of a representative fast food meal and the location of fast food restaurants belonging to one of three major chains in the District of Columbia and its surrounding suburbs. These data are used to test a structural model of spatial competition. The results of this study are easily interpreted and compared with a past analysis. We find that spatial differences in costs and demand conditions drive variation in the number of firms operating in a market, which in turn affects prices.